Snickers maker Mars explores acquisition of Kellanova, sources say

(Reuters) – Family-owned food giant Mars, whose candy brands include M&M’s and Snickers, is exploring a potential acquisition of Kellanova, maker of snacks such as Cheez-It and Pringles, according to people familiar with the matter. 

A deal would be one of the biggest ever in the packaged food sector, given Kellanova’s market value of $22 billion, and test the appetite of U.S. regulators to allow consolidation in the sector. 

Shares of Kellanova are up about 20% since it was spun off from Kellogg (NYSE:) Co last October but are still trading at a discount to some of its peers, such as Hershey and Mondelez (NASDAQ:) International, making it a potential acquisition target. 

There is no certainty that Kellanova will engage and pursue a deal with Mars, the sources said. Another suitor could also approach Kellanova, and it’s possible that no deal with any party is reached, the sources added, requesting anonymity because the matter is confidential.

Kellanova declined to comment, while spokespeople for Mars did not immediately respond to requests for comment.

Dealmaking in the packaged food sector has been robust as companies seek scale to weather the impact of price inflation and drug-loss drugs weighing on demand. But many of the deals have been smaller than the mega merger between Heinz and Kraft clinched almost a decade ago, as U.S. antitrust regulators have become more concerned about the impact of large deals on consumers. 

Kellanova focuses on snacks, such as crackers, toaster pastries and cereal bars, as well as convenience foods such as ready-to-eat cereals, frozen waffles, veggie foods and noodles. It makes its products in 21 countries and markets them in more than 180 countries. 

A family-owned business, Mars’ consumer products include snacks and pet food. It also runs veterinary care centers and has a veterinary diagnostics business .